What Does Tesla Teach Us about the Future?
The Wall Street Journal (sub. req'd) recently had a very comprehensive article about Tesla's efforts to establish "stores" that sell and deliver its electric vehicles directly to consumers. The goal is to cut out the "middlemen" of franchised new automobile dealers. Tesla has won high profile cases allowing it to make direct sales in New York and Massachusetts (Tesla is also able to make direct sales at its stores in New Jersey, California, Illinois, Pennsylvania, Florida, Washington, and the District of Columbia). At the same time, despite intense lobbying by Tesla, Virginia, Arizona and most recently Texas have refused to permit direct sales to consumers.
Now the issue has heated up in North Carolina, where dealers are attempting to strengthen dealer-only sales laws by supporting legislation that would prevent all direct-to-consumer sales by an automaker, including sales over the internet. Tesla wants to retain at least the right to sell over the internet and frames the issue as economic freedom for Tesla and consumers. Tesla's founder, Elon Musk, has also been quoted as having concerns whether dealers used to selling internal-combustion engine cars will aggressively try to sell his company's electric vehicles. Dealers, for their part, emphasize the value and service they provide to their local communities--things like sponsoring high school football teams, fireworks at summer festivals, and Little League.
Dealership franchise laws, and decades of case law backing up those laws, provide the dealership groups fighting Tesla's efforts with substantial legal support. Dealers, and some industry watchers, also note that, if Tesla is successful with federal lobbying efforts aimed at establishing national auto distribution rules, Chinese automakers--many of whom are considering entering the U.S. market--could piggyback on Tesla's efforts.
As the music, television, movie, appliance, electronics and book industries have already learned, the internet can be a hugely disruptive technology for existing sales and distribution models. Amazon and e-books have all but destroyed the large bookstore format. So called "showrooming"--where buyers check out products in store but purchase online--has harmed major retailers such as Best Buy and Target, leading in some cases to products designed for and sold by solely a single retailer.
The Tesla fight--in courtrooms, state legislatures, and ultimately in Congress--over direct and internet sales demonstrates that the disruptive force of the internet extends all the way to the sale of autos--the second biggest purchase many Americans make after their home. And it reminds us that the age of technological change in which we are living can rapidly change things in ways never imagined--and how strongly entities will fight to advance and/or protect their economic interests in that age.
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